Rohit Chopra became one of the most powerful financial regulators by combining bark with bite. As director of the Consumer Financial Protection Bureau, he attacked – often with a gavel – the perpetrators he saw as perpetrating injustices against everyday Americans.
When the bureau imposed $3.7 billion in fines and damages on Wells Fargo last year for violations that included the unlawful seizure of some borrowers’ homes, Mr. Chopra accused the bank of a “cycle of law violations.” When the company sued MoneyGram that same year over delays in sending customer funds, Mr. Chopra said he wanted to go beyond fines and impose a penalty deep enough to “stop repeated violations of the law.” And in a lawsuit against TransUnion, again in 2022, over deceptive sales tactics, Mr. Chopra took the rare step of targeting not only the credit reporting agency but also one of its officers.
This aggressive approach has made Mr. Chopra a hero for consumer advocates and a scourge for the banks and other lenders his agency oversees.
“Wall Street may always attack the CFPB, but its opposition has reached, shall we say, insane levels, with Rohit Chopra at the helm,” said Sen. Sherrod Brown, the Ohio Democrat who chairs the Senate Banking Committee.
Now the future of the agency that Mr. Chopra wielded as a cudgel to change the behavior of the financial industry is in jeopardy – and with it some of Mr. Chopra’s greatest successes.
On Tuesday, the Supreme Court will hear arguments in a case that could upend the bureau and the market it regulates. The U.S. Court of Appeals for the Fifth Circuit ruled last year that the agency’s funding structure, which uses direct transfers from the Federal Reserve, is unconstitutional. It concluded that all actions taken by the office in its 12-year existence should be “undone.”
If the Supreme Court agrees that the bureau’s funding is inadequate, it could at least force the agency to rely on congressional funding. Or the court could follow the Fifth Circuit’s suggestion and overturn everything the agency has done so far.
Mr. Chopra – at 41, one of Washington’s youngest regulatory chiefs – said he was optimistic about the attack on his agency’s power. “I think that’s what you should expect when you do your job,” he said.
His critics are scathing. In an opinion essay, Rob Nichols, the chief executive of the American Bankers Association, criticized the agency’s “politicized enforcement spree” and called it “a renegade regulator.” The U.S. Chamber of Commerce, a pro-business lobbying group, launched a six-figure online advertising campaign to denounce Mr. Chopra’s “radical agenda and reckless actions.”
In a speech last year at the Exchequer Club, a Washington-based group focused on economics and finance, Richard Hunt, a former chief executive of the Consumer Bankers Association, said he suspected Mr. Chopra “hates banks.”
“He has a biased opinion about banks and that’s just not healthy,” Mr Hunt said.
Mr. Chopra maintained that he harbored no such prejudices. “I like to be pretty direct,” he said. “The CFPB does not group companies into good and bad. We look at law-abiding versus non-law-abiding and strive for a market that is what the law says it is – fair, transparent, competitive.”
He is uniquely motivated to progress quickly both personally and professionally. The ongoing battle with cancer reminds him of two things every day: the dedication of his work and the urgency to finish it.
Mr. Chopra was born in New Jersey and raised by first-generation immigrants from India in a suburb just across the border from Philadelphia. His mother, a doctor, teaches geriatrics and his father worked in various engineering and construction jobs.
He graduated from Harvard before attending the Wharton School at the University of Pennsylvania. When he completed his MBA in 2009, he studied the looming housing crisis and was fascinated by the professors who accurately predicted the dynamics of the crash. The experience destroyed any belief that the country’s regulatory standards were worth adhering to.
“The fact that there were so many warning signs that went unheeded – I still can’t fully understand that,” Mr Chopra said. “There is no question that the way financial companies have long been monitored has failed.”
The Consumer Bureau was created by the Dodd-Frank Act, the 2010 law enacted in response to the 2007 financial crisis that triggered the Great Recession. When Elizabeth Warren — who had just managed to convince Congress that Washington needed a new financial regulator — began recruiting for the fledgling consumer bureau, Mr. Chopra sent over his resume.
Ms. Warren eagerly hired him in 2010. Their paths had already crossed at Harvard; Mr. Chopra was one of the few students who registered on the star law professor’s radar.
“The president of Harvard brought him to my attention,” Ms. Warren recalls. “We talked about students knowing early on what kind of battles they want to fight. She told me about Rohit and I met him and was just blown away.”
Colleagues from those early days — including some who later became close allies — remember Mr. Chopra as an intense and sometimes off-putting brash.
“I thought he was a careerist, fast-talking, stubborn person who I wouldn’t like,” said Deepak Gupta, an appellate lawyer who spent a year in the office. “I quickly realized that the first impression was completely wrong – he cares deeply about this work.”
The consumer bureau initially focused on creating new guardrails for the mortgage industry, which had just imploded. Mr. Chopra was interested in another area: student loans. It was a market that few in Washington paid attention to, even as borrowers’ debt burdens soared.
The Dodd-Frank Act required the consumer agency to appoint an ombudsman to handle borrowers’ complaints about their education loans. Mr. Chopra was the obvious choice for the job, said Wally Adeyemo, the consumer bureau’s first chief of staff and now deputy finance minister.
He was “straight out of the central cast – he was both a very bright young person who cared deeply about these issues and was able to articulate not only why protecting individual students made sense, but also why it was for them “Economy made sense,” Mr Adeyemo said.
After getting the job, Mr. Chopra made a characteristic move: He ignored the position’s legal restrictions and refashioned the role into a far broader one. The law, written by Congress, directed the office’s ombudsman to monitor private education loans, a roughly 10 percent slice of a market dominated by federal loans. Mr. Chopra instead focused on these government-sponsored loans and quickly became a thorn in the side of the Education Department, which he liked to describe as “a K-12 police shop with a trillion-dollar bank.”
Mr. Chopra publicly persuaded and shamed the department to step up its enforcement efforts against powerful groups that had long exploited lax federal oversight.
A raid he initiated led to the downfall of Corinthian Colleges and ITT Technical Institute, two giants in for-profit education that were accused of illegal recruiting tactics. A series of damning oversight reports on student loan servicers’ failures — coupled with a still-ongoing lawsuit the consumer bureau filed against Navient, then one of the largest federal servicers — led to changes in the law and stricter oversight that has stopped some of the worst abuses.
Industry leaders were outraged that they were being pursued by a fanged overseer. Shortly before ITT collapsed, the CEO sent an email to his corporate lawyers calling Mr. Chopra a “economic terrorist” who “should be sent to Guantánamo Bay for approximately a decade of rest and recuperation; This should include an aggressive program of water sports!”
“Part of me wishes Rohit could run pretty much any federal agency,” said David Halperin, a Washington lawyer and longtime advocate for higher education funding reforms. “Wherever he went, he did not hesitate to discover the full extent of the powers at his disposal and actually use them, a rare occurrence.”
Mr. Chopra left the consumer bureau in 2015 for a brief stint at the Education Department and then joined Hillary Clinton’s transition team, hoping to take a role in her administration. But the election of Donald J. Trump as president scuppered those plans — and within days, Mr. Chopra’s personal life also fell apart.
During a visit to the doctor, his doctor determined that it was probably a cyst. Busy with planning for Mrs. Clinton’s presidency, Mr. Chopra scheduled an ultrasound for the day after Election Day and assumed he would then rush to work. Instead, he found himself in an unexpected career wilderness, unemployed for the first time in his adult life, and diagnosed with advanced thyroid cancer.
“People can really get hit by a ton of bricks at a time,” he said. Major operations and radiation therapy followed. Mr. Chopra rarely talks about his health problems, but they remain a part of his life.
“You’re still working on it,” he said. “I mean, I’m not in remission. But you’re just a soldier. I’ll be fine.”
Late last year, the New Orleans-based U.S. Court of Appeals for the Fifth Circuit issued a ruling that sent a thunderbolt through Washington.
Trade groups representing short-term lenders had challenged a bureau rule that would have limited some of their activities, such as repeatedly trying to withdraw money from borrowers’ empty bank accounts. They added a long list of objections to their brief, including the argument that the consumer agency’s funding structure was unconstitutional. A three-judge panel of the Fifth Circuit agreed, ruling that the payday rule was therefore invalid and should be struck down.
By attacking a weak regulation that affected a large but small industry, payday lenders had found a court willing to destroy the foundation of every regulatory and enforcement action the bureau had ever imposed. Many legal scholars were stunned. The decision was “a game of matches,” said Dalié Jiménez, a law professor at the University of California, Irvine.
Since the Fifth Circuit’s ruling, more than a dozen companies, including MoneyGram, have sought to dismiss lawsuits or penalties against them. The Supreme Court will hear arguments this week on the Consumer Bureau’s appeal of the Fifth Circuit’s ruling.
The office has weathered other existential legal threats. Most notably, a 2020 Supreme Court ruling gave the president the authority to fire the agency’s director without cause, but upheld the agency’s actions and operations. (The decision cleared the way for Mr. Chopra’s appointment. Without it, Mr. Trump’s chief pick, Kathleen Kraninger, could have remained in the position until her five-year term expired at the end of this year.)
But even Mr. Chopra’s supporters fear his incendiary tactics could backfire. Lawmakers have several options for clipping the agency’s wings — including switching its funding source to budget grants, which would allow Republicans to cut the office’s funding if they control Congress.
“The political pendulum doesn’t stop swinging,” Rep. Patrick McHenry, the North Carolina Republican and chairman of the House Financial Services Committee, warned Mr. Chopra at an oversight hearing. “I know you wish you tried harder to follow the rules.”
Mr Chopra insists he always follows the rules. In his view, he is simply more expansive than others in setting these rules.
Emily Flitter contributed reporting.